R&M (Reichle & De-Massari AG) is looking back on a challenging financial year 2020. The economic consequences of the pandemic and negative currency effects caused Group sales to decline by 9.8 % year-on-year to CHF 249.5 million. «In an international comparison and view of the extraordinary situation in the financial year 2020, this is a solid result,» says Michel Riva, CEO of the developer and supplier of cabling systems, based in Wetzikon, Switzerland.
In local currency terms, the decline was just 4.9 %. The strengthening of the Swiss franc against the US dollar, the Brazilian real, and the Indian rupee made an additional impact on earnings. «Thanks to consistent crisis and cost management, we were able to cushion the decline in sales and currency effects,» says Michel Riva. The EBIT margin dropped only slightly from 5.5 % (2019) to 5.2 %.
R&M’s business model 2020 proved to be resistant to the crisis. The cabling specialist serves three different markets: cabling systems, data centers, and public telecommunication networks. The demand for fiber optic cabling for home broadband access (Fiber to the Home, FTTH) continues to increase. The setting up of 5G radio networks requires investments in FO cabling as the antennas have to be connected to fiber optic networks.
These developments compensated for the decline in the local data network market segment as well as office and building cabling systems. Investments in this area were postponed and even canceled worldwide because of the lockdowns and economic uncertainties. The trend toward working at home temporarily led to a decrease in demand for cabling solutions for office buildings.
Nevertheless, R&M is expecting a recovery in the market for building cabling, estimating that things will begin to pick up again in 2021. The trend toward smart buildings and the Internet of Things (IoT) requires modern, Internet-aided building networks.
In 2020, the data center market was less dynamic than in previous years as various projects were postponed due to the pandemic. R&M equips data centers from colocation and cloud providers with high-density cabling and management software. These segments are benefiting from an increasing demand for computing and storage capacities.
The CEO continues: «In 2020, the Group remained capable of acting at all times thanks to its fast-acting and digitally organized crisis management and its decentralized supply chain.» The temporary closure of some plants due to government-imposed lockdowns was offset within the global network. In the year under review, R&M commissioned two new production plants in the US and China. R&M now has twelve plants of its own and 1,250 employees worldwide.
Major success with broadband expansion
Results from R&M’s sales organizations varied greatly in the reporting year. In Germany and Austria, R&M achieved a double-digit increase due to the large investments made in broadband expansion. In Switzerland too, R&M benefited from investments in FTTH and closed just slightly down on the previous year.
In the rest of Europe, the East, as well as Italy and Portugal, showed positive development. Some of the countries severely affected by the pandemic, such as France and Spain, recorded double-digit declines. The branches in Japan and Australia acquired new large-scale projects. The situation in India improved significantly in the second half of the year. In North and South America as well as in the Middle East, R&M had to accept declining sales.
«Despite the existing uncertainties, we are still optimistic for 2021 and are anticipating solid growth,» says CEO Michel Riva. The growth markets include Fiber to the Home, the cabling of 5G antenna, data centers as well as building automation. And soon R&M will be launching new solutions in all areas.